B11066 Long Term Financing, EVA & MVA: Dewan Housing Finance Limited
B11066 Long Term Financing, EVA & MVA: Dewan Housing Finance Limited
B11066 Long Term Financing, EVA & MVA: Dewan Housing Finance Limited
year
2011-2010
2010-2009
2009-2008
2008-2007
2007-2006
Internal sources
4993.01
1378.7
1139.73
888.25
504.69
PAT
26512.68
15069.28
9176.49
8,257.74
4,840.17
-4392.67
-2973.28
-1778.31
-1857.21
-1680.17
(transfer reserves)
-17500
-11000
-6500
-5725
-2850
retained earnings
4620.01
1096
898.18
675.53
310
373
282.7
241.55
212.72
194.69
641,540.98
335,237.20
190,695.40
83,579.43
95,820.61
2,239.99
2,150.35
1,040.05
0.00
46,973.35
28,046.21
6,760.30
0.00
49,213.34
30,196.56
0.00
7,800.35
0.00
439716.12
275750.25
181953.77
85266.52
84295.36
55350.03
15761.68
13744.13
5527.48
513.33
unsecured loans
97261.49
13528.71
-5002.5
-15014.92
11,011.92
New debts
592327.64
305040.64
190695.4
75779.08
95820.61
Depriciation
External sources
year
2011-2010
2010-2009
2009-2008
2008-2007
2007-2006
Internal sources
171966186
196733703
877994192
116715602
7745610
PAT
915117611
689585678
502759530
423409334
296068349
(dividends plus
dividend taxes)
(transfer reserves)
-449471881
-263201662
194597091
-162144302
-121564350
-312000000
-244000000
171000000
-153000000
-175000000
retained earnings
153645730
182384016
868356621
108265032
-496001
Depriciation
18320456
14349687
9637571
8450570
8241611
6,503,302,20
8.00
4324830
791,359,77
6.00
731900
4,721,399,02
7.00
42,610
36,949,151,41
3.00
125010
2,860,150,95
6.00
81351980
66883496
10938194
242877
712557
527306286
71,208,326.0
0
5187717000
11,670,094.
00
388550031
285,487.00
837,567.00
7434031664
1742373883
608,658,266.
00
1131174666
-350000000
100000000
-350000000
-650000000
1400000000
1594376882
291139651
-2362918124
35855939963
-279681976
6432093882
779689682
4721113540
36948313846
2251492690
External sources
issue of equity shares
premium on equity
shares
Issue of new share
capital
loans from banks/
institutions
non convertible
debentures
unsecured loans
New debts
DHFL-The Company derives its long term financing from both internal as well as
external resources. Most of the financing needs of the company are met by external
sources. Within external sources most of the funding is by the way of new debts
acquired by the company. Company did not even issue equity in two years in the last
5 year period. The reason could be that the cost of debt provided to the company by
banks and NBH is lower than the cost of equity. But in the last two years the company
has issued greater amount of equity as compared to the new debts acquired. This
could be because of the fact that the company has been doing good and the public
perception of the company has also been good, may be because of this reason the
company has decided to raise more money by equity. Also the sector has been really
good in terms of growth.
GRUH Finance Limited- the Company derives most of the financing needs from
external sources. The proportion of money raised via external sources when
compared to internal sources is very high. The company acquires most of its financing
needs from outside because of the sector it operates in, the finance required by a
housing finance company is huge so the company raises most of the money by
acquiring new debts. The cost of debt is less as compared to the cost of equity.
Because of this reason company fulfils its financing needs via acquiring new debt. The
company has increased the amount of money raised by equity over the years. This
could be due to the segment of population that the company caters to i.e. middle to
lower income class. This segment has shown tremendous growth potential in the
housing finance sector.
PART B
d) compute EVA & MVA for DHFL for the past five years1,2,3
2011-2010
9,202.53
2010-2009
18,169.26
2009-2008
13,674.60
2008-2007
12,348.68
2007-2006
2,048.83
137,489.00
145,124.00
7635
9.11%
1,408,193.93
1,641,435.36
116,174.41
98,740.00
99255
515
9.11%
884,032.72
980,437.70
73,029.34
66,011.00
69246
3235
9.11%
574,367.85
639450.93
46544.7
50,027.37
52,342.37
2315
9.11%
413,506.26
441,449.92
11,921.38
32,124.10
33,229.46
1105.36
9.11%
330,062.18
357,997.79
14,253.94
87,066.87
30,000.15
128286.467
154,843.28
13,137.43
10,238.21
80570.7421
92,943.71
10850.77
7687.61
52336.39849
45,754.04
10,252.67
5769.61
37678.69041
44,507.02
9,631.86
4049.81
30075.26584
36,527.25
10,442.64
144,400.64
8,502.65
78,841.06
6352.3
39401.74
6752.3
37754.72
7,428.61
28,848.51
5600
0
266.15
337.3
195
104,426,402
27793086892
0
249.025
322.6
175.45
82,026,544
20426660120
0
125.25
208.45
42.05
60522975
7580502619
0
140.775
240.35
41.2
50,122,519
7055997612
250.13
73.65
89.85
57.45
50,122,519
3691523524
27,792,932,04
9.02
0.018827435
20,426,567,17
5.89
0.017046066
7,580,456,86
4.71
0.015976678
7,055,953,10
5.21
0.019970048
3,691,486,99
7.10
0.014664419
0.206667785
0.187031664
0.175336673
0.219162076
0.160935236
1.79443096
148.32
2.421009139
102.86
1.77232206
70.67
2.312715623
60.87
1.302157001
56.56
e) compute EVA & MVA for GRUH finance limited for the past five years1,2,3
(in Rs)
2011-2010
2010-2009
2009-2008
2008-2007
2007-2006
75938439.73
288038987.6
636154712.8
43097240.85
-1474160.17
NOPAT
2924268664
2491588195
2514547966
1634071950
1230658389
EBIDTA
3283200000
2760600000
2717200000
1811700000
1238900000
TAX
340610880
254662118
193014463
169177480
Depreciation
18320456
14349687
9637571
8450570
8241611
9.21%
9.21%
9.21%
9.21%
9.21%
CAPITAL INVESTED
30936572437
23933411615
20401794865
17280055492
13382562715
TOTAL ASSETS
32842694342
25877483705
24660235811
19633085017
14694789228
1236942775
1355952468
3748818375
1595507534
829345654
INVESTMENTS
346609125
327195511
127779263
166421520
174575743
322570005
260924111
381843308
591100471
308305116
CAPITAL CHARGE
2848330224
2203549207
1878393253
1590974709
1232132549
3179377538
2646260783
2208702571
1902665317
1642337374
Share Capital
351576330
347251500
346519600
346476990
346351980
2827801208
2299009283
1862182971
1556188327
1295985394
437.025
313.375
157.75
160.5
149.075
560.3
433.3
233.75
221.6
178.1
313.75
193.45
81.75
99.4
120.05
No of equity shares
34938346
34671607
34649660
34640765
31483622
15268930661
10865214844
5465983865
5559842783
4693420950
12089553123
8218954061
3257281294
3657177466
3051083576
0.029580446
0.028812678
0.024642907
0.024502776
0.022123442
0.321282133
0.312943172
0.267654033
0.266132033
0.240289366
P/BV ratio
4.80300033
4.111993177
2.474898023
2.922964852
3.143715732
90.99
76.21
63.74
54.91
47.42
WACC
Share price
f) historical performance of the two firms: DHFL & GRUH finance limited
DHFL- the EVA of the company has been declining over the past 5 years. This
signifies that though the company has been growing by increasing its value
but it has not been able to increase the rate of growth. This could be because
of the fact that the company has recently widens its horizons to other
segments as well. This may have resulted in the decreased operational
efficiency of the firm in a new segment. Other reason could also be because of
the fact that all the segments of the housing finance sector may not be
growing at an equal pace. The MVA of the company has been constantly
increasing; it signifies that the market perception of the company is very
good. This could because of the fact that the company has now diversified its
portfolio and now it caters to almost every segment of the population. Also
because of the growth in the housing finance sector the market perception of
the company has been good.
GRUH finance limited- the EVA of the company has been positive for the
past 5 years but it has been reducing over the past two years. The reason for
such decline could be the increased amount of equity raised form the market.
The company operates in a single segment and has good operational control
so operational inefficiency could not be reason for the reduction in EVA. The
MVA of the firm has been constantly rising; it reflects a positive market
perception of the company. It could be because of the increase in the size of
the segment in which the company operates. The company also kind of
enjoys a monopoly in that segment. It could be one of the factors for a
positive market perception of the company.
B11066_6.xlsx
www.nseindia.com
2 annual report 2011 to 2007 DHFL
3 annual report 2011 to 2007 GRUH finance limited